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Your role in identifying potential money laundering

Regulatory Update: Anti Money Laundering

Illegal money laundering equates to between 2-5% of global GDP, which is somewhere between $800 billion and $2 trillion. The estimated gap in these figures reflects how difficult it is to track laundered money, the result of criminal activity. The United Nations attributes rapid developments in technology and communications to the increasing challenge of ‘finding, freezing and forfeiting’ laundered money.

The UK’s Fifth Money Laundering Directive (5MLD) came into effect on 10 January 2020 and, in line with this, businesses are expected to review and amend their money laundering and terrorist financing policies and procedures.

The new directive affects accountancy firms and businesses with letting agents, art dealers and crypto currencies now also in its scope.

For accountancy firms, be mindful that:

  • the rules affect businesses providing both direct and indirect tax advice (including High Volume Repayment Agents)

  • for limited company or LLP clients, it is compulsory that details of the Persons with Significant Control have been filed with Companies House and any discrepancy is reported

  • electronic ID verification can be considered a reliable source of evidence as long as the process is free from fraud and it provides adequate proof of the individual’s identity

For businesses you will need to:

  • identify complex or unusually large transactions

  • review policies for new products, business practices or technology, ensuring that the firm assesses and mitigates all money laundering and terrorist financing risks

  • verify the identity of the senior managing official in the company when identifying the beneficial owner of a company is not possible

  • exercise enhanced due diligence for any transaction where either of the parties is established in a high-risk third country, or in the case of complex or unusually large transactions

  • be aware of additional risk factors as part of client due diligence: golden visa applicants; dealing with a client without reliable electronic CDD; any transaction risks including oil, arms, precious metals, tobacco, ivory and protected species

The resources list below is useful for any further guidance you might need.

Useful resources:

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